As reported in this blog on January 31, 2011, the SEC adopted amendments to its disclosure rules and forms on January 25 for public companies that are subject to federal proxy rules. Such amendments, inserted as Section 14A to the Securities Exchange Act of 1934 and relating to shareholder approval of executive compensation, took effect on April 4.
The new rules implement Section 951 of the Dodd-Frank Reform Act, which allows the SEC to exempt smaller issuers from its requirements. All public companies other than smaller reporting companies, must hold say-on-pay and frequency votes at shareholder meetings starting January 21, 2011. Smaller reporting companies will be subject to the votes at annual meetings starting on January 21, 2013. The SEC has published a small entity compliance guide to assist registrants with compliance.
Companies are required to disclose preliminary vote results within four business days of the completion of the shareholder meeting and final voting results within four business days after those results are known on Form 8-K. Companies other than smaller reporting companies are required to address in the Compensation Discussion and Analysis (CD&A) whether and, if so, how their compensation policies and decisions have taken into account the results of the most recent say-on-pay vote. Smaller reporting companies are not required to provide a CD&A.
A smaller reporting company is one that has a common equity public float of less than $75 million as of the last business day of its most recently completed second fiscal quarter or one that is unable to calculate its public float and has annual revenue of $50 million or less upon entering the system.
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